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Italy,United States : GE Reaffirms Commitment to Russian Market with $1 Billion Sourcing Plan and Expanded Strategic Partnerships.

General Electric reaffirmed its commitment to the companys growth plans in Russia by announcing a $1 billion sourcing program and signing a series of agreements with its Russian strategic partners at the 17th GE Oil & Gas Annual Meeting in Florence. The new initiatives are aimed at accelerating GEs localization of advanced technology solutions across the oil & gas, power, and transportation industries, as well as driving demand for local suppliers.

GE announced it will work with Russian businesses to develop up to $1 billion in sourcing opportunities by 2020 to better meet its global manufacturing needs by capitalizing on the increased competitiveness of Russian fabrication, forging, and casting. The company is currently working on several key infrastructure projects with Russian producers that meet GE quality and safety standards.

Jeff Immelt, GE Chairman and CEO, said: We continue to see long-term development opportunities in Russia, including in sourcing from Russian manufacturers for our global businesses. Today, we are also pleased to be strengthening our partnerships with Rosneft and Transmashholding. This is a great example of GE working with leading Russian companies to tackle some of the regions most technically intensive projects.

Expanding the scope of their 2013 strategic partnership, GE and Rosneft, Russias largest oil company, announced a long-term cooperation program to jointly develop local expertise and advanced solutions, including in marine propulsion and oilfield equipment manufacturing.

In marine:

GE and Rosneft will proceed with preparations for joint work at an industrial shipbuilding cluster in Vladivostok. The cluster is planned to locally produce electrical equipment and steerable pod thrusters based on GE technology as well as service marine diesel engines produced by a GE?Transmashholding joint venture for Rosnefts fleet and other Russian civil vessels.

At the meeting in Florence, GE, Rosneft, and Transmashholding signed a Letter of Intent providing for the local production of GE V250 marine diesel engines by the GE-Transmashholding JV in Penza, Russia. The delivery of the first units to Rosneft is expected in early 2018.

In oil & gas:

GE and Rosneft will further explore development plans for a facility in Murmansk, Russia to locally assemble GE oil & gas equipment to support Rosnefts production activities.

The companies will continue joint work on artificial lift technology, with deliveries of GE electric submersible pumps (ESPs) already underway to Rosneft and its subsidiaries for testing and evaluation.

Advancing their collaboration on small-scale LNG technologies, GE and Rosnefts subsidiary Itera will move forward with development plans for the first small-scale LNG plant in Russia.

The companies will cooperate on a pilot project to leverage GE digital technologies for remote monitoring and control to further optimize operations at Rosnefts largest refinery, located in Ryazan, Russia.

GE and Rosneft will also evaluate the potential of stationary distributed power solutions based on diesel engines locally produced by GE and Transmashholding in Penza.

Commenting on the program signing, Igor Sechin, Rosneft Management Board Chairman, said: The implementation of the program signed today with one of the global technology leaders, signifies that our partnership is entering a new stage industrial cooperation which will enable us to meet the buoyant demand being formed by the Russian fuel and energy sector with the potential to jointly enter global markets.

Also in Florence, GE and Transmashholding (TMH), Russias leading rail equipment producer, signed a strategic business plan providing for the launch of a 50-50 joint venture, pending final regulatory approvals, to localize manufacturing of advanced GEVO diesel engines at a new facility in Penza, Russia. The project is aimed at addressing the locomotive needs of Russian Railways, as well as providing engine solutions for marine vessels and distributed power applications.

The companies plan to invest over $70 million in the plant and related equipment, training, and technology. The GEVO engines to be produced at the new facility will incorporate advanced GE technologies to lower life-cycle operating costs, while increasing efficiency, reliability, ease of maintenance, and time between overhauls. The agreement envisages initial production of up to 250 engines per year in the 2,9004,700 kW class, with the potential to expand the ventures production capacity and product portfolio according to future market demand. The companies also agreed that a priority goal for the joint venture will be identifying export opportunities for its products.

Andrey Bokarev, Transmashholding President, said: Transmashholding has high expectations for the future of this joint project with GE to develop and produce state-of-the-art diesel engines. It will significantly expand our expertise and the range of products we offer to the market. In combination with our existing solutions, we will be able to offer engines to our customers that precisely meet their needs. Its particularly noteworthy that the new venture will produce engines not only for the Russian market, but also for export.

GEs new agreements with its strategic partners in Russia accelerate the companys commitment to invest $1 billion in the Russian oil & gas, power, and transportation industries by 2020.

Ron Pollett, President & CEO, GE Russia/CIS, said: Russia has been an important and strategic market for us for nearly 100 years. Together with Rosneft and Transmashholding, we are moving forward on key projects to support the development of Russian infrastructure and manufacturing capabilities. By strengthening our mutually beneficial strategic partnerships and growing our local supply chains, GE is reaffirming its long-term commitment to the Russian market.

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Publication:Mena Report
Geographic Code:4EXRU
Date:Feb 6, 2016
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